We're fixing a broken market

Continuing the story a bit from last week’s memo, here’s a recap of why we seem to be building for so many different users. I’m going to try to brain-dump, so bear with me:

In a nutshell, the energy efficiency industry believes that to move the whole market, we need:

1. Regulations as a forcing function (because we can’t convince customers to take the jump)
2. Dedicated money, preferably in the form of subsidy (whether grant or loan)
3. Reduced complexity. Just make it a whole lot easier.

We play a role in all of the above, but let’s start with some basics.

Good intentions won’t drive better buildings. Fixing systems will.

All the good intentions in the world don’t mean a thing unless construction happens.

In the history of the energy efficiency industry (or green building in general), it happens to be the architects and engineering consultants (A&E) who started the movement for building and re-building buildings differently. The A&E consultant tries their best to convince the client to do a new-to-them thing, but the client won’t be convinced. This leads the A&Es to imagine that if only the clients knew more about why the green thing is the right thing – or, since real estate people care about expenses, if they could be convinced that the “right thing” saves money – the owner would see the light!

IMHO, what has been missing from all these conversations over the past 20 years is carefully considering the nature of the owner’s “work to be done” and the system in which those decisions are made.

1. Real estate is not widgets. If you sell widgets, the more you sell, the more money you make. If you can reach efficiency of scale (i.e. where your marginal cost of product is lowest it can get), then you’re just printing profit. There’s no hard upper limit to how much you can make. Fun! But that is not how real estate works. Real estate is like a controlled implosion: it’s mostly risk management.

The most that any real estate can make has a hard upper limit set by the market price of space. In real estate, you don’t get to ramp up production if your product sells. You make ALL the investments up-front, and you NEVER get to adjust your stock. Basically, you make all the widgets up front, and then your task is to make the amount of money you planned to make. If you make more, then that’s great! But mostly, you have to NOT make less.

Every decision has a risk dimension in real estate, and owners/managers are always choosing the de-risked option. De-risked most often means “I’ve done it before and understand what might go wrong, so I can line up a plan B for it.”

2. Risk management requires information and construction is a dry desert of information. I’ve already talked about this ad nauseam. It’s basically a commons problem – it doesn’t help you directly to contribute to the information commons, and there’s no easy way to do it. The benefit of an information commons is that real estate decision makers would then have de-risked stuff that they personally haven’t had experience of.

3. “Better” than what? “Better” is evaluated in the context of the decision to be made. If I’m in the market for a banana, a riper apple isn’t “better.” To influence a decision, you have to offer a choice that is on the spectrum of choices already, not something totally orthogonal.

This is getting long, so let’s say this is part 1 of x! Leave me your thoughts in Slack!

Metrics

Traction

• Unique Buildings: 6,349 (+127 MoM)
• Annual Run Rate: $1.46M (+$15K or +11.45% MoM) Note the annual run rate’s increase is due to the inclusion of Buchbinder and The Related Cos. revenue at the final close of the April books.

Financials

• Monthly net burn (accrual basis): $76,814 (3-month avg, +6.73% MoM)
• Year-to-last-month net burn (cash basis): $82,536 (-41.2% MoM)
• 2025 Transaction fees to date: $8,659
• Outstanding invoices as of today: $261,068 (+$172,030 WoW or +193.21% WoW”) Note the increase in outstanding invoices is due to our sending renewal invoices to Buchbinder and The Related Cos. last week.

Development

• Release 94 went out last week! It included 19 tickets, including wrapping up the NPV feature for FirstService, moving the Willdan monthly reporting to a more automated process (François still needs to trigger the report, but that’s minutes as opposed to the hour+ it used to take me), and some bug fixes.
• Bug Count (P-0 and P-1): 7 (⬇️ 50% since last week!)

Last Week’s Highs and Lows

• Got news that we’re scheduled for interviews for the NYC Accelerator RFP and the ConEd MFEEP re-compete This is great news, as it means that we’re one of the top contenders for each one – my guess would be that we are THE top contender in each. BJ
• Shipped NPV for FirstService Energy! We did it! BJ (+1 FH, and we got space and energy usage editable too! +1 JB)
• Jeremy’s 360 helped drive great discussions. Love the transparency! (FH)
• It feels really good to have multiple time sensitive deadlines in service of potential users and important contracts. After First Service, onwards to the $2.5M demo for NYC Accelerator RFP… and L+M! (FH +1 JB)
• Adding to the above item, I’ve really enjoyed the all hands on programs/project discussions. They feel very productive, and it feels good to have everyone on the Momentum team working on the same thing. (JB)
• François showed me a demo of the new approach for temporary environments to test feature branches, which seems pretty slick. I feel like this idea has been floated several times over the last 1-2 years, and I’m excited to try it out. (JB
• Scoped out how Momentum will be used to support the Con Edison-L+M pilot project (MZ)
• Got pushed by our customer Related in a constructive way to take a closer at our data sources (MZ)

Any missing highlights? Please share in Slack comments.

Crow’s Nest

Looking out for icebergs: What are the risks on the horizon that we’re watching for and navigating around?

Bomee’s List

• Getting Marc a product he can sell Shipping FSE was great! Now program-project and developments next!
• Team dynamics We’re still gelling.
• Cash. We have a net burn that we need to minimize. If we win these RFPs, we can make strategic investments!
• NYCA – waiting
• ConEd Recompete – waiting
• The background hum of uncertainty for the housing/construction industry. The predicted recession is not great news.

François’ List

• Shipping small, often, well, and safe: I don’t think anybody feels great yet about where we are right now (at least Momentum side, the hardest side). But there’s real progress on testing speed, coding and PR best practices, involving Jeff early and often, and navigating long-term branches, all while pleasing the SOC-2 gods. Let’s keep at it, we’re almost there!
• Growing the team: the “$2.5M demo” is not only motivating on its own, it also re-opens the door to hiring. Let’s prep for it, so that we can identify the right skills, attract the right candidates, and welcome them efficiently. Ahead of permanent hires, and to flex our onboarding muscles, could it make sense to get help from consultants for Laravel expertise, or interns for testing help?
• (repeat from previous weeks) Automated Testing: I’m convinced that reliable tests that run quickly and reflect our users’ experience are table stakes to move faster and with more confidence. Are we going to find the bandwidth to get this party going?

Jason’s List

Carryover:

• NYC Accelerator RFP–this would be a big contract and have impacts on revenue plan and product roadmap. Interview is coming soon!
• How can we continue to reduce the barriers to giving users useful information? I’m excited for Naina’s progress on scraping data out of pdfs so we can make it easier to get non-public information. We see a lot of potential use for this beyond getting a v0.
• Updating our project workflow. We have a better idea of who will be using this now, which is a great start. And we’re focusing on getting a demo-able version ready for the upcoming interviews. Now that’s motivation! More chatter about adaptation > mitigation. This feels both scary at the macro scale—have we missed the tipping point?—but also I think more difficult to streamline with software than decarbonization. CPC’s Climate Friendly Homes Fund program being capped at $150M instead of $250M. Apparently NYS had to use that money to cover some other projects in need. It’s still going to be a very impactful program, but it ending early is sad for at least a couple of reasons. We’ll need to shift focus away from new project intake to getting contractor costs in the system and program reporting.

Erika’s List

Carryover:

• Healthcare this week we’ll have all of the numbers in and can make a decision. We have a couple of things to weigh: overall employer and employee costs, quality of the available plans and if the timing is right to switch.

• I reviewed our Worldwide Work Policy with our CEN mentor Chelsea and during legal office hours last week and we have some things to think about ahead of future hiring, such as the overall compliance burden of supporting a fully remote, global workforce. As an employer, we need to ensure we are compliant so we do not have a tax (or any other administrative) surprise later on. We are mostly thinking of things right, but there are a couple of things to look into. The policy itself will be shared before the end of the month.

• Also on a hiring note and hiring remote employees, I shared our hiring process, job description template and a sample job description as well as one of our hiring rubrics with Chelsea for feedback, which she will share this week (and I in turn will share with the team). As François mentioned above, now is the time to think about how we will hire and get on the same page about process and strategy. A good hiring process ties in to the onboarding process (of which we have haad much discusion) and having clear expectations for new hires and setting them up for success. Oh, and we should also think about salaries and comps across regions ahead of time and what we can use or share about ourselves to attract top talent.

• Mid-year budget review I pushed my attention on this back to wrap up the healthcare comps and close the April books but we have what we need to make decisions around where we may scale back and reduce burn, how we might reallocate budget, etc. Also important

Marc’s List

• Local headwinds for Local Law 97. Even as we solidify our market positioning, political forces to roll back this law in some way are more serious than ever. And anecdotally at least, a lot of affordable housing buildings are going to be out of compliance this year which is not great optics.

On Deck for This Week

• Get Program-Projects ready to demo for the interviews! Let’s go, team! BJ

• On the Calc Service side, adding two new measures–ground source heat pump (GSHP) and air-to-water heat pump (AWHP)–to support screening the L+M portfolio, and testing out exporting bulk processing of scopes. These are part of our contract with L+M, but I think other users will find value in these features as well, so this is just the beginning. (JB)

• Selecting a health care plan / PEO provider (EP)

• Webinar with SiteCompli on Wednesday to promote the Urban Green Council “Steps to LL97 Website” to owners and managers (MZ)

• First Service Energy subscription re-engagement kick off (MZ)

• Big meeting with Related asset management team on Thursday to review decarb plan recommendations (MZ)

• Here’s what’s on the Company Radar

Upcoming Release

Next release is Release 95, scheduled for Wed May 28. It needs to include a demo-able version of the project flow for the interviews.

Please Leave Feedback

Please note your reaction to this update in the Slack channel. It helps us to know what is resonating, what is unclear, etc. Thanks!

• What are your highlights / low-lights?
• Did we miss a highlight? Something else you want to react to?